Upcoming Retirement Benefit Changes

Because of changes in life expectancy, there will be changes for those retiring this coming July 1 and later in lump-sum cashouts and adjustments for contingent annuitants (typically spouses who receive benefits after the death of the retiree). If people live longer, the value of their stream of benefits increases. So the lump sum will go up. And the decrease in the monthly benefit of the retiree to pay for the contingent recipient will also go up, i.e., the monthly benefit of the retiree will go down.

Note: Retirees should think long and hard before selecting the lump-sum cashout, a choice which, among other things, means they will not receive retiree health insurance. 

From UCnet: At the July 2023 meeting of the University of California Board of Regents, the Regents approved changes to actuarial assumptions that could impact the future UC Retirement Plan (UCRP) benefits of certain employees, depending on their retirement date and options selected. These changes will not impact the retirement benefits of current retirees. While the Regents approved maintaining the current investment return assumption (e.g., discount rate) at 6.75%, there were modifications to the mortality assumption based on the findings that UCRP members and beneficiaries are continuing to live longer. These changes, informed by an experience study conducted by UCRP’s actuary, will go into effect on July 1, 2024.

These changes will not impact the calculation of Basic Retirement Income. However, for retirements on or after July 1, 2024, changes will be implemented in the calculations of the UCRP lump sum cashout and UCRP monthly retirement income for members and contingent annuitants... Generally, there will be decreases at many common retirement ages for the member and contingent annuitant. This will lead to lower benefits payable under these options for retirements on or after July 1, 2024...

Full news release at https://ucnet.universityofcalifornia.edu/news/2024/03/factors-used-to-calculate-ucrp-payment-options-will-change-on-july-1-2024.html.